Office of Medicaid (MassHealth) Review of Controls over Pharmacy Claims

This is a state audit of MassHealth’s controls over pharmacy claims from July 1, 2009 through June 30, 2011.

“In accordance with Chapter 11, Section 12, of the Massachusetts General Laws, the Office of the State Auditor (OSA) conducted an audit of pharmacy claims paid during the period July 1, 2009 through June 30, 2011.”

The auditor reviewed the program because Medicaid is a major public program with known risks of fraud, waste, abuse, and mismanagement, especially around drugs with high abuse potential.

“Our audit was conducted as part of the Office of the State Auditor’s ongoing independent statutory oversight of the Commonwealth’s Medicaid program.”

If MassHealth’s records are incomplete or inaccurate, auditors and investigators may have trouble finding billing problems or possible fraud.

“Without complete and accurate claims information, independent reviewers of the Pharmacy Program cannot effectively identify trends and anomalies indicative of billing irregularities and potentially fraudulent activities.”

For taxpayers and MassHealth members, better pharmacy data can help protect public money and support safer oversight of high-risk prescription drugs.

“As with any government program, the confidence of the public is essential to the Pharmacy Program’s success and continued support.”

The audit’s main finding was that MassHealth’s Data Warehouse did not have enough reliable information to fully review pharmacy claims.

“Our audit found that MassHealth’s Data Warehouse does not contain all of the information necessary to effectively review the Pharmacy Program.”

The auditor recommended that MassHealth improve its Data Warehouse by adding provider identifiers, clearly labeling compound drugs, and accurately transferring refill information.

“MassHealth should improve the completeness and accuracy of claims information within the Data Warehouse by adding a data field to capture the prescribing provider’s NPI number; identifying compound drugs with a descriptor (e.g., “Compound”); and transferring the “Allowed Number of Refills” data from POPS to both MMIS and the Data Warehouse for all prescription drug claims.”

This matters because the audit found large numbers of claims where provider or drug information was missing from the main review system, including Schedule II drugs with high abuse potential.

“During the audit period, MassHealth paid 1,259,226 claims, totaling $66,575,674, for Schedule II pharmaceuticals.”

The Data Warehouse is MassHealth’s main place for storing claims data so reviewers can search it for patterns that may need investigation.

“The Data Warehouse is the source from which all pharmacy claims can be queried and analyzed by independent reviewers, including the Office of the State Auditor (OSA), to identify trends and anomalies that may warrant further investigation.”